NEW YORK — Wall Street extended its rally with modest gains in the major indexes following two days of sharp advances, despite economic readings that painted a mixed picture of the economy.

Though the indexes rose, declining issues narrowly outpaced advancers on the New York Stock Exchange.

On Tuesday and Wednesday, the market posted its biggest two-day rally in five years. Hopes have been growing that financial companies may be starting to recover from the credit crisis and that the Federal Reserve may lower interest rates to calm the markets.

Wall Street’s anticipation of a rate cut follows comments from a Fed official Wednesday and comes ahead of a speech by Fed Chairman Ben Bernanke scheduled for Thursday evening.

The Dow Jones industrial average rose 22.28, or 0.17 percent, to 13,311.73. In the three sessions since a pullback Monday, the Dow has jumped 568.29, of 4.5 percent. The Standard & Poor’s 500 index edged up 0.70, or 0.05 percent, to 1,469.72, and the Nasdaq composite index rose 5.22, or 0.20 percent, to 2,668.13.

Declining issues outnumbered advancers by about 9 to 7 on the New York Stock Exchange, where consolidated volume came to 3.43 billion shares compared with 4.45 billion traded Wednesday.

For the week, the Dow is up 2.55 percent, while the S&P is up 2.01 percent and the and the Nasdaq is up 2.75 percent. The pace of the gains, however, has been fast enough that a bit of profit-taking wouldn’t come as a surprise on Wall Street. The declines that preceded the latest surge had been sharp as well, however. By the end of the day Monday, the market’s major indexes had fallen more than 10 percent from levels in mid-October — meeting the technical definition of a correction.

Bond prices rose, with the yield on the benchmark 10-year Treasury note falling to 3.94 percent from 4.05 percent late Wednesday. Bond prices and yields move in opposite directions. The dollar rose against other major currencies, while gold prices fell.

Light, sweet crude for January delivery rose 39 cents to settle at $91.01 a barrel in choppy trading on the New York Mercantile Exchange. The rise in oil helped energy companies. Exxon Mobil Corp. rose 67 cents to $88.59, while ConocoPhillips advanced $1.10 to $78.82.

The Commerce Department reported that economic growth in the third quarter was 4.9 percent, stronger than originally thought, although analysts are anticipating a slowdown in the fourth quarter.

U.S. home prices showed a quarterly decline for the first time in 13 years in the third quarter, according to figures from the Office of Federal Housing Enterprise Oversight, which reported a 0.4 percent drop nationwide for the July-September period.

The economic reports came as investors awaited clarity on the Fed’s direction on interest rates. Bernanke was slated to speak Thursday evening before the Chamber of Commerce in Charlotte, N.C.

Investors have sent stocks sharply higher in recent days in part because Fed Vice Chairman Donald Kohn suggested another interest rate cut could be in store. The Fed, which has cut rates at each of its last two meetings, is slated to meet again on Dec. 11.

Wall Street also has been calmed by evidence that companies hurt by subprime problems have found financial backers to help stem the damage.

In the latest such action, E-Trade Financial Corp. said on Thursday that Citadel Investment Group would provide $2.5 billion in cash to shore up the company’s balance sheet. E-Trade also said Mitchell H. Caplan had resigned as chief executive.

E-Trade, which holds billions in risky mortgage debt, said it will sell its entire portfolio of asset-backed securities to Citadel for $800 million and book a $2.2 billion charge on the sale. E-Trade fell 46 cents, or 8.7 percent, to $4.82.

In other corporate news, Sears Holdings, parent of its namesake department store chain and Kmart, said profits plunged to a penny per share from $1.27 per share a year earlier due to lower sales and clearance markdowns. The stock fell $12.25, or 10.5 percent, to $104.09.

Researchers said Sunday the mass die-off occurred because unusually large amounts of sea ice forced penguin parents to travel farther in search of food for their young. By the time they returned, only two out of thousands of chicks had survived.